Already known for its innovative footwear, swoosh logo and “just do it” slogan, Nike is also making strides in the workforce management arena. Nike’s flat structure is unique among legacy companies, making this brand an excellent study of the inner machinations of a big business. The company uses this flat structure to maximize transparency and agility among employees and sub-divisions while minimizing bureaucracy and deployment time for new ideas.
What Is a Flat Structure?
A flat structure blends two different types of business hierarchies: those of traditional hierarchies in which multiple people report to one leader, and product hierarchies in which teams are divided based on specific products, customer base and geography – and report to one overseeing body. In Nike’s flat setup, teams are divided based on product and report to separate product managers while also remaining accountable to more broad department managers. With the flat structure, employees typically report to a minimum of two managers – one that handles more project-based assignments and another who manages regulation and policy.
Nike’s flat structure, also known as a matrix structure, consists of several divisions separated into subsidiaries: Converse, Hurley and others, which all report to Nike’s global headquarters. The subdivision for EMEA, which Nike’s European headquarters manages, replicates this structure, while the U.S., the Americas and Asia Pacific locations are housed within the global headquarters’ oversight.
Nike’s many divisions operate pseudo-independently within the overall Nike brand name. This controlled autonomy keeps Nike’s brand consistent and ensures a certain standard of customer service and product delivery, while also affording separate regional and product brands the flexibility to satisfy niche customer needs and demands.
Benefits of a Flat Structure
One of the main benefits of this structure is that it makes room for decision-making to happen without ideas getting trapped in a traditional, more bureaucratic, chain of command. On average, it takes a project a year and a half to launch at Nike, from initial design to the actual crafting of the product. This level of agility also gives Nike teams the ability to keep their ear to the ground when it comes to trends and customer preferences and make changes as they see fit.
Another plus of Nike’s flat structure is that it facilitates transparency and caters to all markets. Managers are responsible for smaller teams and decisions happen faster and with more collaboration among individual parties. Nike’s smaller regional teams typically respond more to customer demand and distribution needs, while overall factory orders remain within the authority of Nike’s headquarters.
Annually, Nike’s products undergo approximately 30,000 to 40,000 developments. Cosmetic changes in things like color and regular features occur constantly. Nike branches typically focus on apparel while footwear remains largely in the realm of global headquarters. The independence of Nike’s subsidiaries and regional subsets and their singular focus allows for these changes to happen on a continual basis without interference from governing bodies or deviation from Nike’s overall brand.
Disadvantages of Nike's Matrix Structure
Despite its track record of success, Nike's matrix structure has its flaws. While this type of organizational structure is based on clear roles and hierarchies, it can make it harder for employees to climb up the career ladder. This can affect employee morale and motivation as well as retention rates.
Another drawback is that communication often gets lost. A division may have several different departments for the same function, which may create confusion and slow things down. Furthermore, it increases the organization's costs.
Even though most departments operate efficiently and are able to make fast decisions, managers may end up with a heavy workload and take on more responsibility. Those who are new to the job or lack certain skills may find it difficult to keep up with the latest changes and handle complex situations.